Does Huaneng Power International Inc (HKG:902) Have A Place In Your Dividend Portfolio?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 10 years Huaneng Power International Inc (SEHK:902) has returned an average of 5.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Huaneng Power International should have a place in your portfolio. See our latest analysis for Huaneng Power International
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Huaneng Power International fare?
Huaneng Power International has a trailing twelve-month payout ratio of more than 200% of earnings, which suggests that the dividend is not well-covered by earnings by any means. In the near future, analysts are predicting a more sensible payout ratio of 52.35%, leading to a dividend yield of around 5.95%. Furthermore, EPS should increase to CN¥0.37, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although 902’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Huaneng Power International produces a yield of 6.74%, which is high for Renewable Energy stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Huaneng Power International as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key aspects you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for 902’s future growth? Take a look at our free research report of analyst consensus for 902’s outlook.
2. Valuation: What is 902 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 902 is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
